IT Procurement Management Near me
Procurement management can be defined as independent monitoring or tracking of manufacturing
processes according to purchase requisitions. An implicit assumption of EOQ (Economic Order
Quantity) analysis is that the purchase price per unit is constant. This assumption is not valid in a
period of inflation. When the rate of inflation is predictable, the EOQ formula can be used.
The standard EOQ model assumes that materials can be procured immediately, and therefore
implies that the company may place a replenishment order if the inventory drops to zero. However,
in the real world it takes time to source materials and so the order level must be such that there is
enough inventory at the time of order to meet production requirements during the sourcing period.
When the material usage rate and lead time to procurement are known with certainty, the order
level is simply the lead time in days to procurement multiplied by the average daily usage. If the
usage rate and lead time are likely to vary, the reordering level should be higher than the normal
usage period during the procurement period to provide a level of assurance given the variability of
usage and lead time. In other words, the reorder level should match the normal consumption added
by the safety stock.
If both lead time and usage rate vary, which is often the case, and the range of variation is large,
complete protection against inventory may require an inordinately large safety stock. Since the cost
of inventory is proportional to the amount of inventory, it rarely makes sense to seek complete
protection against inventory. Given the trade-off between inventory cost and inventory cost, the
optimal safety stock is usually much less than the safety stock required to achieve full protection
against inventory.
Summery
Procurement management is an innovative way to increase efficiency through cutting costs and
maximizing existing resources. So, if you are looking IT procurement management near me services,
then contact with your local IT support services.